Correlation Between Global Warming and Coherent

Can any of the company-specific risk be diversified away by investing in both Global Warming and Coherent at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global Warming and Coherent into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Warming Solut and Coherent, you can compare the effects of market volatilities on Global Warming and Coherent and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global Warming with a short position of Coherent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Warming and Coherent.

Diversification Opportunities for Global Warming and Coherent

0.64

Correlation Coefficient

Global Warming  Coherent

Poor diversification

The 3 months correlation between Global and Coherent is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global Warming Solut and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Global Warming is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global Warming Solut are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Global Warming i.e., Global Warming and Coherent go up and down completely randomly.

Pair Corralation between Global Warming and Coherent

Given the investment horizon of 90 days Global Warming Solut is expected to generate 11.91 times more return on investment than Coherent. However, Global Warming is 11.91 times more volatile than Coherent. It trades about 0.15 of its potential returns per unit of risk. Coherent is currently generating about 0.16 per unit of risk. If you would invest  32.00  in Global Warming Solut on September 18, 2024 and sell it today you would earn a total of  128.00  from holding Global Warming Solut or generate 400.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Warming Solut  vs.  Coherent

Global Warming Solut

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Warming Solut are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global Warming displayed solid returns over the last few months and may actually be approaching a breakup point.

Coherent

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Coherent are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Coherent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Warming and Coherent

The main advantage of trading using opposite Global Warming and Coherent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Warming position performs unexpectedly, Coherent can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Coherent will offset losses from the drop in Coherent's long position.

The idea behind Global Warming Solut and Coherent pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.